Dollywood postpones planned 2009 addition

"Although Dollywood was excited to announce Adventure Mountain for 2009, the ongoing downturn in the economy has created unpredicted changes in cost and availability of basic materials like steel and concrete used to build the new attraction. Therefore, Dollywood is choosing to take a proactive step to delay the Adventure Mountain project."

Mamoosh

Wednesday, November 5, 2008 5:00 PM

I have to agree with Jeff that there isn't more to this than some think. It's not the first time an attraction has been axed due to materials costs. Hershey's Frequent Faller project is the most recent that comes to mind.

D the Great

Thursday, November 6, 2008 9:32 AM

Material cost is volatile, but I thought that the cost of building was way down and contractors are hungry for work. Also, there are plenty of places that are moving forward with their projects. There have been a lot of cuts by these guys recently. Herschend seems to be in cost cutting mode, but for what? I thought that their parks were doing well. Of course it may be a precautionary financial desicion to protect themselves a little for next year. It seems logical that they may forsee a hard year next year and plan for that.

Just to play the devil's advocate for a moment though, could these decisions also involve a certain plot of land off of highway 17 in Myrtle Beach? Not that I believe every rumor I hear, it's just that this one seems to be making a little sense nowadays.

Jeff

Thursday, November 6, 2008 10:17 AM

Herschend manages the park, but it's my understanding that they don't own any significant portion of it. If that's the case, cap ex is going to come down to whether or not the Dollywood company wants to spend the money.

From what I've read on the subject, Dave is right, that prices for raw materials are absolutely all over the place. It's true for all commodities right now. I mean, gas is under two bucks here now, when it was over four six months ago. That's nuts.

RideMan

Saturday, November 8, 2008 12:41 AM

It's not just that gas has gone from >$4 to <$2 in a matter of *weeks*. Oil and gasoline seem to be the exception in commodities and raw materials. I just looked at a few charts chosen at random (google is your friend...) for gold, silver, copper, aluminum, and steel, and all of those have seen wild price swings. Oil has basically just crashed from nearly $150/bbl to around $65/bbl, but even at that, its price has been swinging through about a $10 range every day. Gold is probably the most extreme example (particularly since the gold trading market has little to do with real world uses) where during October the price has been everywhere between $800 and $1000 per ounce. I am not familiar with the standards for other metals, so I can't interpret the numbers in terms of cost per unit (don't know which currency, don't know what unit), but just for October, the price swings on everything I looked at have been absolutely crazy. If you are a low-volume user of raw materials, how can you budget for that? It's just like what Interactive ran into with the Hersheypark deal a couple of years ago: the materials price took them from being able to make a tidy profit to not being able to fabricate the ride.

It's not so bad if you're building commodity products and you are buying your steel a couple million pounds at a time (1M lbs = 500 tons). But if you're building *one* ride whose finished weight is going to be under 40 tons*, and you can't store a lot of raw material on site, how do you budget for that?

--Dave Althoff, Jr.

* Typical of a single-trailer portable ride: maximum weight without special permits for a semi trailer is 80,000 pounds gross.